Crossover SUVs to Outsell Traditional SUVs in 2006
- December 12, 2005
- Acura, Audi, BMW, Buick, More Categories...
- Posted by George Peterson
- Comments Off on Crossover SUVs to Outsell Traditional SUVs in 2006
Crossover SUVs will outsell Traditional truck-based SUVs beginning in 2006. This forecast comes from George Pipas, Ford’s Manager of Sales Analysis and Reporting in a presentation in Long Beach, CA on December 12, 2005. Refer to the VehicleVoice Blog on December 8 citing a USA Today article on similar observations.
A Few Comments on What a Crossover SUV Is
Pipas’ analysis charts the meteoric rise of Traditional SUVs during the 1990s and the similarly meteoric rise of Crossover SUVs since 1996 when the first crossovers – the Honda CR-V and Toyota RAV4 – were introduced. Of course, defining SUV categories is getting murkier and murkier. VehicleVoice (http://www.vehiclevoice.com) and AutoPacific (http://www.autopacific.com) have used the “at-a-glance” rule to define SUVs. If you can, at-a-glance, tell that a vehicle is an SUV, then by golly it is an SUV. In this way you are not confused about whether it is car-based or truck-based. (Pipas contends that only about 70% of Crossover SUVs meet this at-a-glance requirement with 30% easily confused as cars, hatchbacks, or wagons.)
Traditional SUV 2007 Cadillac Escalade – Category Expected to Decline as a Percentage of Overall SUV Universe
The auto industry thinks differently and often gets caught up in definition problems. They have variously called car-based SUVs “hybrids” (a term since adopted by gasoline-electric ‘hybrid’ powerplants) or “crossovers”. In our research, we have found that folks really have not yet adopted the crossover term and still like to refer to SUVs as SUVs. But enough about splitting hairs about what is a crossover and what is not.
Social Consciousness Evolves into Paroxysm of Spittle Sputtering Rage
The SUV category has been a controversial segment since it became popular in the early 1990s with the introduction of high volume 4-door SUVs like the Ford Explorer and Jeep Grand Cherokee. In 1990, SUVs accounted for 7% of the market growing to 12% in 1995, 20% in 2000 and about 27% in 2005. Because of its popularity and rapid growth SUVs were a great target for the media. Some found SUVs environmentally unfriendly. Others criticized them for being too fuel inefficient. There were allegations that SUVs tended to roll over more than cars with lower centers of gravity.
While all of these criticisms are true to some extent, SUV sales continued to increase throwing many media pundits into a paroxysm of spittle sputtering rage. Traditional SUVs became the poster children of the socially conscious.
Buyers Wanted More Friendly SUVs, But Really Did Not Care Too Much if They Were Truck- or Car-Based
While these folks were criticising Traditional SUVs, consumers were asking the car companies for more fuel efficient, more maneuverable, better handling, better riding SUVs. Beginning in 1996 small SUVs like RAV4, CR-V and Forester were beginning to be introduced. Later the luxury Lexus RX300 was launched. Frankly, most folks did not know or care if their SUV was based on a truck or on a car. They wanted the basics of the SUV to be met and leave the underpinnings to Ford, General Motors and Toyota.
Pipas contends that rising gasoline prices are not the primary reason Traditional SUV sales are deteriorating. He says high gas prices just are fuel on the fire the media is using to snipe at SUVs in general and Traditional SUVs in particular. Additionally, he observes that “high gas prices did not start the downward trend in Traditional SUV sales, nor will lower gas prices reverse the trend.” High gas prices “accelerated a trend that was already underway.”
SUVs Continue to be Huge Category… Shift Happens Within the Segment
AutoPacific’s forecasts show that Pipas is on the right track. He projects that SUV sales will continue to increase through the decade, but that the mix between Traditional and Crossover SUVs will shift. In fact, he is predicting a sales volume of about 2,000,000 units for Traditional SUVs in 2010 down from a peak of nearly 3,000,000 in 2000. Overall, his forecast for total SUVs sales is about 5,000,000 units – similar to AutoPacific’s forecast.
He attributes this to the “power of product colliding with demographics”. Baby Boomers are now in their peak earning years and are ready to move into more civilized and sophisticated SUVs. Additionally, they are becoming “posterior challenged” needing a vehicle that is even more easy to get into and out of, more spacious (to accommodate their more generous posterior). Manufacturers are moving to provide these prospective buyers with the types of products they demand.
So the die is cast, even if we should avoid using the term “Crossover” and still consider a vehicle that looks like an SUV an SUV, the fact that car-based, unit-body SUVs will soon outsell Traditional truck-based SUVs seems absolutely correct.